Crude Climbs On AIG Rescue Plan

Crude is higher early Wednesday morning after bouncing from its biggest two day drop for nearly four years after the Fed agreed a rescue plan for ailing US insurance giant AIG.

This has added a little bit of much needed confidence back into the market, lowering the risk of a further economic slowdown in the U.S.

Oil climbed more than $3 a barrel on expectations saving AIG from collapse will reduce the chances of more economic turmoil that would limit demand for fuels.

The Federal Reserve Board, with support of the U.S. Treasury, invoked emergency powers to lend as much as $85 billion to AIG to save the firm from collapse.

All eyes this afternoon will be on the US Energy Dept stocks data figures released at 3.35pm London time.

With shutdowns in the Gulf of Mexico last week analysts expect crude inventories to have fallen around 3.5m barrels. Gas & distillate stocks probably also dropped, analysts say.

At 7.45am London time crude stood $2.97 higher at $94.12/barrel.